Shift in Rice Policy Worries Experts

By Ros Sothea, VOA Khmer
Original report from Phnom Penh
10 April 2008

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Economists and agricultural experts are worried that Cambodia will face rising rice prices once again, following government exceptions to an export ban.

The government put a rice export ban in place in late March following a price hike in milled rice, but it recently lifted the ban for certain farmers on the Vietnamese border.

Complaints over high prices have settled in the weeks since the ban, but economists warn the prices are likely to climb again, as neighboring countries experience a shortage of the staple.

The government meanwhile has injected $10 million in loans to rice exporters, but experts worry this won't be enough.

Hoping to prevent a crisis, the government recently provided $10 million in loans to rice milling groups and the government-owned Green Trade Company, to buy rice in the three provinces of Takeo, Prey Veng and Kandal.

Freelance economist Sok Sina told VOA Khmer that to buy rice from people was a good measure from the government to stabilize the rice price, but he warned the prices will increase again if the government runs out of money for subsidies.

"The rice will not come down. So what we are worried about is how much money the government has to make such subsidies, because it really needs a lot of money," Sok Sina said.

Sun Kunthu, president of Cambodia Rural Development Bank, which is under the government, said that the $10 million in loans will be paid back within six months, keeping the rice price steady.

The stimulus loans overlap with an April 7 directive from Prime Minister Hun Sen to allow farmers in Takeo, Prey Veng and Kandal to export rice to Vietnam, which is facing a shortage for export.

Ministry of Commerce officials said the measure was necessary, as farmers in those provinces were facing moisture in the rice due to recent rains.

An official from a rice milling association in Takeo said that since the government lifted the ban, between 20 and 30 boats came from Vietnam each day, carrying away 5 tons to 10 tons of rice per boat.

"If we open the border to export rice to Vietnam, the rice price will increase," he warned.